UnitedHealth’s president and chief financial officer David Wichmann added that the company served 795,000 people on public exchanges as of the end of the first quarter. It expects to have only 650,000 public exchange members by December.

This could be a blow to President Obama and his signature law to overhaul the nation’s healthcare system.

And according to estimates from the Kaiser Family Foundation, it could mean higher insurance premiums in several states — most notably Alabama, Arizona, Iowa, Nebraska and North Carolina.

But Ben Wakana, a spokesman for the Department of Health and Human Services, said that the Obama administration expected there to be “changes and adjustments in the early years with issuers both entering and exiting states.”

Wakana added that “it’s clear that this is a growing business for insurers, and it’s a product consumers want and need.” He added that the success of the exchanges should not be judged by the decision of just one individual insurer.

Still, the industry is also in the midst of massive consolidation — which is often good news for investors and bad news for consumers.

UnitedHealth rivals Aetna (AET) and Humana (HUM) are merging. So are Cigna (CI) and Anthem(ANTM). That means that the industry could be about to go from five big players to only three.

But Cynthia Cox, associate director of health reform and private insurance at Kaiser, said this won’t be the death of Obamacare.

She noted that UnitedHealth has been more cautious about entering the ACA markets than its competitors. Hemsley had warned previously that claims tied to the Obamacare exchanges were costlier than expected.

And other insurers that focus on Medicaid and Medicare pans, such as Centene (CNC), are more prominent players in the state exchanges.

Still, Wall Street applauded the news. Shares of UnitedHealthcare rose nearly 1.5%. It helped that the company’s earnings and revenue topped forecasts. UnitedHealth also boosted its financial targets for the year.